In the past period of time, market volatility has been highly concentrated in a small group of stocks. I wonder if anyone has experienced a period where the index rises but your holdings are out of sync.

Over the past six months, the market has become increasingly "narrow":
The index hits new highs, but the main funds are almost exclusively crowded into the same lane—AI, semiconductors, and a few heavyweight stocks.

Other sectors either trade sideways or drift lower, occasionally following a rally for a day or two before quickly falling behind. On the surface, it looks like prosperity, but underneath, participation is shrinking.

This is what is known as breadth narrowing: "the market's rises and falls are highly concentrated in a few stocks," and any shock to these core assets could instantly turn into a shock to the entire "bull market."

What is breadth narrowing?

It refers to a situation where the rally is driven mainly by a few heavyweight or theme stocks, while the majority of stocks do not follow, or even weaken. It describes a contraction in market participation.

Market breadth is an indicator worth paying close attention to during an economic cycle. When the index rises but most constituent stocks do not, it is considered "narrowing breadth"; conversely, when most stocks rise together, it is "broad breadth."

The breadth narrowing effect: It indicates that the index has evolved from "broad participation" to "concentration in a single theme or a few styles," such as the current phenomenon of "only a few AI semiconductor giants lifting the index."

This narrowing can be either a healthy concentration of capital (institutions crowding into the strongest track) or a signal of fatigue at the end of the cycle (other sectors generally peaking and clearing positions).

If we look at the recent market from this perspective, it has actually become healthier: funds have flowed out of the storage sector and into healthcare, consumer goods, software, and the Magnificent Seven, increasing market breadth. The market has shifted from "narrow and strong" to "broad and strong," entering a rotation phase in the middle to late stages of the bull market.